New Delhi: The interest rates on deposits of public sector banks have declined. Most public sector banks (PSBs) interest rates of less than 7 per cent across tenures. In this light, RBI’s bonds seem attractive, given the rate on offer – 7.75 % – that too for a tenure of seven years.
These bonds are popularly known as RBI or GOI bonds and are available on tap all through the year through nationalised banks. A few private sector banks too allow these investments – Axis, ICICI and HDFC banks.
The interest, 7.75 per cent, is payable half-yearly. There is a cumulative option too. Investments compound at half-yearly rests in this option. An investor is paid a maturity value of Rs 1703 for Rs 1000 invested.
You can invest a minimum amount of Rs 1000 and there is no upper limit. These bonds are issued in demat form.
Investments in this bond do not get any tax breaks. The interest paid is clubbed with the income of the investor and taxed at his/her slab rate.
“On non-cumulative RBI bonds, there is a provision to deduct tax at source (TDS),” says C S Sudheer, CEO and founder of IndianMoney.com.
